Chief Economist of the Reserve Bank of New Zealand (RBNZ) Paul Conway gave a speech on inflation during the early Wednesday market session, noting that inflation troubles exist on both sides of the RBNZ's policy stance.

Key highlights

Inflation may be stickier in the short-term. However, inflation could fall more quickly than expected in the medium-term, as spare capacity emerges in the economy, which would help. Challenges remain to bring inflation back to RBNZ target levels. A period of restrictive policy is necessary to give confidence that inflation will return to target over a reasonable timeframe